Faded inflation fuels hike in pre-tax income at Anglian Water

Anglian Water reported a 90% year-on-year hike in adjusted profits before tax to £142m for the year to 31 March 202. The increase was largely attributed to a £79m drop in financial costs compared to 2020.

The adjusted pre-tax profit figure excluded fair value losses on derivatives which were down £7m to £23m.

Revenue was off 4.8% to £1.35bn reflecting price reductions under PR19 and reduced non-household demand offset by increased domestic consumption arising from the pandemic. Operating costs were down £35m to £590m while depreciation and amortisation were reduced by £17m to £351m and bad debt provision was cut by £9.6m to £31m.

As part of its policy to reduce gearing, the company paid no dividend during the year and proposes to pay a final dividend £96.3m with no dividend going shareholders of parent Anglian Water Group.

Subsequent to the reporting period Anglian carried out an equity injection of 110m and reported the it was “considering a new financing structure in order to enable a substantial equity injection into the Company, leading to a future reduction in gearing.”

The new financial strategy proposal included structural changes to Anglian’s holding company, Osprey Acquisitions, and its financing vehicle, Anglian Water Services Financing.

The proposed equity moves received various affirmations and upgrades of the company debt and credit rating from rating agencies, Moody’s, Fitch and S&P.